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Compare the way a bargain purchase option and a residual value are treated by the lessee...

Compare the way a bargain purchase option and a residual value are treated by the lessee when determining minimum lease payments.

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The bargain purchase price is included in minimum lease payments calculated by lessee.Since the bargain purchase price is paid at the end of the term present value will be calculated and added to minimum lease payments of lessee . It is included in amount of lease to be capitalized and liability to be paid

For Residual value only guaranteed residual value is considered . The present value of guaranteed residual value is calculated and included in minimum lease payments. Residual value which is not guaranteed by the lessee is ignored.

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